Kite Realty Group Trust Reports Fourth Quarter and Full Year 2012 Results

  Kite Realty Group Trust Reports Fourth Quarter and Full Year 2012 Results

Business Wire

INDIANAPOLIS -- February 7, 2013

Kite Realty Group Trust (NYSE: KRG) (the “Company”) announced today operating
results for the fourth quarter and full year ended December 31, 2012.
Financial statements and exhibits attached to this release include results for
the three and twelve months ended December 31, 2012 and 2011.

Highlights

Operations

  *Funds From Operations, as adjusted, was $0.10 per diluted common share for
    the fourth quarter of 2012 and $0.43 per diluted common share for the year
    ended December 31, 2012.
  *Same Property Net Operating Income for the fourth quarter of 2012
    increased 3.1% over the prior year and 3.2% for the full year 2012
    compared to 2011.
  *The total portfolio was 94.2% leased at year-end.
  *Executed 55 new and renewal leases for 417,300 square feet during the
    fourth quarter for aggregate cash rent spreads of 25.5%.
  *Executed 167 new and renewal leases for 955,800 square feet during 2012
    for aggregate cash rent spreads of 15.0%.
  *Revenue from property operations increased 8.7% in the fourth quarter over
    the prior year.

Acquisitions and Dispositions

  *Acquired Shops at Plaza Green, a power shopping center in Greenville,
    South Carolina in December for $28.8 million.
  *Acquired a Publix-anchored shopping center in Greenville, South Carolina
    in December for $9.1 million.
  *Completed the sale of three unanchored retail projects, two commercial
    properties, and one parcel of land held for development during the fourth
    quarter, generating $20.7 million in gross proceeds.
  *Subsequent to the end of the quarter, the Company acquired a
    Publix-anchored shopping center in Orlando, Florida for $11.6 million.

Development

  *Completed Oleander Place, the 100% leased Whole Foods-anchored
    redevelopment in Wilmington, North Carolina, and transitioned the project
    into the operating portfolio in the fourth quarter.
  *Subsequent to the end of the fourth quarter, commenced construction
    activities on Phase I of Parkside Town Commons in Cary, North Carolina. In
    December, the Company sold a parcel of land to Target, executed a lease
    with Harris Teeter Supermarket, and acquired its partner’s 60% interest at
    a discount to book value.
  *Signed an anchor lease with LA Fitness at the Bolton Plaza redevelopment
    in Jacksonville, Florida and transitioned to an in-process redevelopment
    in the fourth quarter.

Capital Markets

  *Issued 12.1 million common shares in the fourth quarter for net proceeds
    of $60 million which were redeployed to fund acquisitions and
    redevelopment costs.
  *Closed on a $18.4 million construction loan for Rangeline Crossing
    redevelopment property in Carmel, Indiana.
  *The Company’s 2013 debt maturities are $29.2 million on three properties.
  *The Company completed $414 million of financing related activities in
    2012.

Financial and Operating Results

For the three months ended December 31, 2012, funds from operations (“FFO”), a
widely accepted supplemental measure of REIT performance established by the
National Association of Real Estate Investment Trusts, was $8.5 million, or
$0.10 per diluted share for the Kite Portfolio, compared to $8.6 million, or
$0.12 per diluted share, for the same period in the prior year. FFO for the
fourth quarter included a $0.3 million partial recovery of a previously
recorded litigation charge. Excluding the effects of the Company’s 12.1
million share offering in October 2012, FFO for the fourth quarter of 2012
would have been $0.11 per diluted share. The Company’s allocable share of FFO
(excluding the partial recovery of the litigation charge) was $7.8 million for
the three months ended December 31, 2012 compared to $7.6 million for the same
period in 2011.

For the twelve months ended December 31, 2012, FFO was $30.5 million, or $0.41
per diluted share, for the Kite Portfolio compared to $31.8 million, or $0.44
per diluted share, for the prior year. FFO, as adjusted to eliminate the
effects of a one-time litigation charge in 2012 and a write-off of deferred
financing fees in the second quarter of 2012, was $32.0 million, or $0.43 per
diluted share, for the Kite Portfolio. Further excluding the effects of the
Company’s 12.1 million share offering in October 2012, FFO for 2012, as
adjusted, would have been $0.44 per diluted share. The Company’s allocable
share of FFO was $27.5 million for the twelve months ended December 31, 2012
compared to $28.3 million for the twelve months ended December 31, 2011.

Given the nature of the Company’s business as a real estate owner and
operator, the Company believes that FFO and FFO, as adjusted, are helpful to
investors when measuring operating performance because they exclude various
items included in net income or loss that do not relate to or are not
indicative of operating performance, such as gains or losses from sales and
impairments of operating properties, and depreciation and amortization, which
can make periodic and peer analyses of operating performance more difficult.
For informational purposes, we have also provided FFO adjusted for the
litigation charge and related recovery recorded in the first quarter and
fourth quarter of 2012, respectively and the write-off of deferred loan costs
in the second quarter of 2012. We believe this supplemental information
provides a meaningful measure of our operating performance. The Company
believes presenting FFO in this manner allows investors and other interested
parties to form a more meaningful assessment of the Company’s operating
results. A reconciliation of net income to FFO and adjusted FFO are included
in the attached table.

Net loss attributable to common shareholders was $6.5 million for the fourth
quarter of 2012, compared to net income for the same period in the prior year
of $3.1 million. This change is primarily attributable to an $8.0 million net
non-cash remeasurement loss from the acquisition of our partner’s interest and
related consolidation of Parkside Town Commons in the current quarter. The
change between years also reflects a $1.9 million net gain on the sale of
operating properties in 2012 and a $3.9 million net gain on the sale of
operating properties in 2011. The Company’s total revenue for the fourth
quarter of 2012 was $26.7 million, an increase from $24.6 million for the same
period in 2011. This increase is due to improved occupancy levels and tenants
opening for business at development properties.

Net loss attributable to common shareholders was $12.3 million for 2012
compared to a net loss in the prior year of $0.8 million. This change is
primarily attributable to the $8.0 million net non-cash remeasurement loss
from the acquisition of our partner’s interest and related consolidation of
Parkside Town Commons and $5.7 million of depreciation expense attributable to
development properties becoming operational and accelerated depreciation at
redevelopment properties. The Company’s total revenue for 2012 was $101.1
million, a 7.6% increase from $94.0 million in 2011.

John A. Kite, Kite Realty Group’s Chairman and Chief Executive Officer, said
"Our team successfully acquired $75 million of quality operating properties in
our core markets while executing on our strategy of disposing of non-core,
low-growth assets. We were able to commence construction on multiple
development assets and look forward to delivering these exciting projects in
2013. Our operating portfolio continues to perform very well. We ended the
year at 94.2% leased for the portfolio, achieved a significant increase in our
cash rent spreads, and increased our same store net operating income by more
than 3% compared to 2011."

Operating Portfolio

As of December 31, 2012, the Company owned interests in 54 retail operating
properties totaling approximately 8.4 million square feet. The owned gross
leasable area (“GLA”) in the Company’s retail operating portfolio was 94.2%
leased as of December 31, 2012, compared to 93.3% leased as of December 31,
2011. During the quarter, the 100% leased Whole Foods-anchored Oleander Place
in Wilmington, North Carolina was substantially completed and transitioned to
the operating portfolio.

The Company owns two operating commercial properties totaling 381,723 square
feet. As of December 31, 2012, the owned net rentable area of the commercial
operating portfolio was 93.6% leased. During the quarter, the Company sold its
Indiana State Motor Pool and Pen Products commercial properties totaling
201,000 square feet. The combined leased percentage for the retail and
commercial operating portfolios was 94.2% as of December 31, 2012.

On a same property basis, the leased percentage of 48 same store operating
properties increased to 93.7% at December 31, 2012 from 92.8% at December 31,
2011. Same property net operating income for these properties increased 3.1%
in the fourth quarter of 2012 compared to the same period in the prior year.
Same property net operating income increased 3.2% for the full year 2012
compared to 2011.

The Company believes that NOI is helpful to investors as a measure of its
operating performance because it excludes various items included in net income
that do not relate to or are not indicative of its operating performance, such
as depreciation and amortization, interest expense, and impairment, if any.
The Company believes that same property NOI is helpful to investors as a
measure of its operating performance because it includes only the NOI of
properties that have been owned for the full period presented, which
eliminates disparities in net income due to the redevelopment, acquisition or
disposition of properties during the particular period presented, and thus
provides a more consistent metric for the comparison of the Company's
properties. Same property NOI should not, however, be considered as
alternatives to net income (calculated in accordance with GAAP) as indicators
of the Company's financial performance.

Leasing Activities

During the fourth quarter of 2012, the Company executed 55 new and renewal
leases for a total of 417,300 square feet and a positive cash rent spread of
25.5%. Leases with 37 new tenants were signed for approximately 279,700 square
feet of GLA, representing a 28.7% positive cash rent spread. A total of 18
leases for 137,600 square feet were renewed with a 18.6% positive cash rent
spread.

For the year, the Company executed 167 new and renewal leases totaling 955,800
square feet for a 15% aggregate rent spread. New leases were signed with 102
tenants for 517,500 square feet of GLA and a 21.9% positive cash rent spread.
A total of 65 leases for 438,300 were renewed during the year with a positive
cash rent spread of 5.6%.

The following new anchor leases were signed in the fourth quarter:

  *The Fresh Market at Lithia Crossing in Tampa, Florida
  *The Fresh Market at Eagle Creek Shops in Naples, Florida
  *LA Fitness at Stoney Creek Commons in Indianapolis, Indiana
  *LA Fitness at Bolton Plaza in Jacksonville, Florida, as part of a
    redevelopment of the shopping center
  *Publix Supermarkets at King’s Lake Square in Naples, Florida, as part of a
    redevelopment of the shopping center.

Development Activities

As of December 31, 2012, the Company owned interests in six in-process
development/redevelopment projects that were 81.4% pre-leased or committed.
The total estimated cost of these projects is approximately $240.3 million, of
which approximately $166.1 million had been incurred as of December 31, 2012.

The Company has transitioned Phase I of Parkside Town Commons in Cary, North
Carolina to an in-process development. The development’s primary anchor,
Target Corporation, has acquired 10.7 acres of land for the construction of a
135,000 square foot store in the project’s first phase. In addition, Harris
Teeter Supermarkets has signed a ground lease and will construct a 53,000
square foot grocery store on the site. Phase I of the development is expected
to contain approximately 239,600 total square feet with an estimated project
cost of approximately $39 million. Construction is anticipated to commence in
early 2013 with an estimated opening in the spring of 2014. Additionally, the
Company acquired its partner’s 60% interest in the development project in the
fourth quarter of 2012 for $13.3 million, including assumption of the
partner’s $8.7 million share of indebtedness on the project.

Also during the quarter, the Company transitioned Bolton Plaza in
Jacksonville, Florida to an in-process redevelopment project. This $10.3
million project is 84.2% pre-leased or committed, including a recently signed
38,000 square foot lease with LA Fitness.

Subsequent to quarter end, Publix Supermarket opened at Delray Marketplace in
Delray Beach, Florida and the Company anticipates opening another 123,100
square feet of retail space including the Frank Theatre in the first quarter
of 2013.

Acquisition and Disposition Activities

In December, the Company acquired Shops at Plaza Green, a 195,500 square foot
shopping center in Greenville, South Carolina. The center is 95% leased and is
anchored by Bed Bath & Beyond, Old Navy, Christmas Tree Shops (a Bed Bath &
Beyond concept), Shoe Carnival, and Party City. The purchase price, exclusive
of closing costs, was $28.8 million.

During the fourth quarter, the Company also acquired a Publix-anchored 68,000
square foot shopping center in Greenville, South Carolina for a purchase
price, exclusive of closing costs, of $9.1 million. The center is 97% leased.

During the quarter, the Company sold Zionsville Place (Indianapolis MSA),
Sandifur Plaza (Pasco, Washington) and Preston Commons (with adjacent land)
(Dallas MSA) from its retail operating portfolio and Pen Products
(Indianapolis MSA) and Indiana State Motor Pool (Indianapolis MSA) from its
commercial portfolio. These dispositions of non-core assets generated $20.7
million in gross proceeds.

Subsequent to quarter end, the Company acquired a Publix-anchored shopping
center in Orlando, Florida for a purchase price of $11.6 million.

Capital Markets Activities

During the fourth quarter of 2012, the Company completed a public offering of
12,075,000 common shares at a price of $5.20 per share, which generated net
proceeds to the Company of approximately $60 million. The Company initially
used the proceeds to repay borrowings under our unsecured revolving credit
facility and subsequently redeployed the proceeds to fund acquisitions and
redevelopment costs.

During the fourth quarter, the Company closed on a $18.4 million construction
loan for the Rangeline Crossing redevelopment project in Indianapolis,
Indiana. The loan bears an interest rate of LIBOR plus 225 basis points, which
decreases to LIBOR plus 210 basis points upon obtaining certain coverage
ratios.

The Company also closed on seven-year variable rate loans for its Fishers
Station and Bridgewater Marketplace retail properties in Indianapolis, Indiana
totaling $8.0 million and $2.0 million, respectively. It subsequently entered
into interest rate hedges on these loans reflecting fixed rates of 4.02% and
4.27%, respectively.

Distributions

On December 19, 2012, the Board of Trustees declared a quarterly common share
cash distribution of $0.06 per common share for the quarter ended December 31,
2012 payable to shareholders of record as of January 4, 2013. This
distribution was paid on January 11, 2013. The Board of Trustees anticipates
declaring a quarterly cash distribution for the quarter ending March 31, 2013
later in the first quarter.

2013 Earnings Guidance

The Company currently expects FFO for the year ending December 31, 2013 to be
within a range of $0.43 to $0.47 per diluted common share and net income
(loss) to be within a range of $0.01 to $(0.03) per diluted common share.
Given the nature of the Company’s business as a real estate owner and
operator, the Company believes that FFO is helpful to investors when measuring
operating performance because it excludes various items included in net income
that do not relate to or are not indicative of operating performance, such as
gains or losses from sales, impairments of operating properties and
depreciation and amortization, which can make analyses of operating
performance more difficult.

While other factors may impact FFO and net earnings, the Company’s 2013
guidance is based primarily on the following assumptions:

  *The acquisition of $25 to $50 million of retail operating properties;
  *Commencement of redevelopment activities at King’s Lake Square in Naples,
    Florida in June and Wal-Mart Plaza in Gainesville, Florida in May which
    results in a $0.01 reduction in FFO per diluted common share;
  *Portfolio leased percentage ranging from 94.0% to 95.5% at December 31,
    2013;
  *An increase of 2.0% to 3.0% in same property net operating income as
    compared to the prior year;
  *Transactional FFO and lease termination fees ranging from $0.02 to $0.04
    per diluted common share; and
  *General and administrative expense ranging from approximately $7.2 million
    to $7.4 million.

The Company’s 2013 guidance is also based on a number of other assumptions,
many of which are outside the Company’s control and all of which are subject
to change. The Company may change its guidance as actual and anticipated
results vary from these assumptions. The Company’s guidance excludes any
potential transaction costs.

Following is a reconciliation of the range of 2013 estimated diluted net loss
per share to estimated diluted FFO per share:

Guidance Range for 2013                       Low          High
                                                                   
Net (loss) income per diluted common share       $ (0.03 )       $ 0.01
Depreciation and amortization                     0.46          0.46
FFO per diluted common share                     $ 0.43         $ 0.47
                                                                   

Earnings Conference Call

The Company will conduct a conference call to discuss its financial results on
Friday, February 8^th at 11:00 a.m. eastern time. A live webcast of the
conference call will be available online on the Company’s corporate website at
www.kiterealty.com. The dial-in numbers are (866) 202-3048 for domestic
callers and (617) 213-8843 for international callers (passcode 67615875). In
addition, a telephonic replay of the call will be available until May 8, 2013.
The replay dial-in telephone numbers are (888) 286-8010 for domestic callers
and (617) 801-6888 for international callers (passcode 84420922).

About Kite Realty Group Trust

Kite Realty Group Trust is a full-service, vertically integrated real estate
investment trust engaged in the ownership, operation, management, leasing,
acquisition, construction, redevelopment and development of neighborhood and
community shopping centers in selected markets in the United States. At
December 31, 2012, the Company owned interests in a portfolio of 60 operating
and redevelopment properties totaling approximately 9.3 million square feet
and three properties currently under development totaling 0.5 million square
feet.

Safe Harbor

This press release contains certain statements that are not historical fact
and may constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results of the Company to differ materially from
historical results or from any results expressed or implied by such
forward-looking statements, including, without limitation: national and local
economic, business, real estate and other market conditions, particularly in
light of the recent recession; financing risks, including the availability of
and costs associated with sources of liquidity; the Company’s ability to
refinance, or extend the maturity dates of, its indebtedness; the level and
volatility of interest rates; the financial stability of tenants, including
their ability to pay rent and the risk of tenant bankruptcies; the competitive
environment in which the Company operates; acquisition, disposition,
development and joint venture risks; property ownership and management risks;
the Company’s ability to maintain its status as a real estate investment trust
(“REIT”) for federal income tax purposes; potential environmental and other
liabilities; impairment in the value of real estate property the Company owns;
risks related to the geographical concentration of our properties in Indiana,
Florida and Texas; and other factors affecting the real estate industry
generally. The Company refers you the documents filed by the Company from time
to time with the Securities and Exchange Commission, specifically the section
titled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2011, which discuss these and other factors that could
adversely affect the Company’s results. The Company undertakes no obligation
to publicly update or revise these forward-looking statements (including the
FFO and net income estimates), whether as a result of new information, future
events or otherwise.

Kite Realty Group Trust
Consolidated Balance Sheets
(Unaudited)
                                                          
                                        December 31,        December 31,
                                         2012                2011
Assets:
Investment properties, at cost:
Land                                     $ 239,690,837       $ 238,129,092
Land held for development                  34,878,300          36,977,501
Buildings and improvements                 892,508,729         845,173,680
Furniture, equipment and other             4,419,918           5,474,403
Construction in progress                   223,135,354         147,973,380
                                           1,394,633,138       1,273,728,056
Less: accumulated depreciation             (194,297,531  )     (178,006,632  )
                                           1,200,335,607       1,095,721,424
Cash and cash equivalents                  12,482,701          10,042,450
Tenant receivables, including accrued
straight-line rent of $12,189,449 and      21,210,754          20,413,671
$11,398,347, respectively, net of
allowance for uncollectible accounts
Other receivables                          4,946,219           2,978,225
Investments in unconsolidated              15,522              21,646,443
entities, at equity
Escrow deposits                            12,960,488          9,424,986
Deferred costs, net                        34,536,474          31,079,129
Prepaid and other assets                   2,169,140           1,959,790
Total Assets                             $ 1,288,656,905     $ 1,193,266,118
                                                                             
Liabilities and Equity:
Mortgage and other indebtedness          $ 699,908,768       $ 689,122,933
Accounts payable and accrued expenses      54,187,172          36,048,324
Deferred revenue and other liabilities     20,269,501          12,636,228
Total Liabilities                          774,365,441         737,807,485
                                                                             
Commitments and contingencies
                                                                             
Redeemable noncontrolling interests in     37,669,803          41,836,613
the Operating Partnership
                                                                             
Equity:
Kite Realty Group Trust Shareholders’
Equity:
Preferred Shares, $.01 par value,
40,000,000 shares authorized,              102,500,000         70,000,000
4,100,000 shares and 2,800,000 issued
and outstanding, respectively
Common Shares, $.01 par value,
200,000,000 shares authorized
77,728,697 shares and 63,617,019           777,287             636,170
shares issued and outstanding,
respectively
Additional paid in capital                 513,111,877         449,763,528
Accumulated other comprehensive loss       (5,258,543    )     (1,524,095    )
Accumulated deficit                        (138,044,264  )     (109,504,068  )
Total Kite Realty Group Trust              473,086,357         409,371,535
Shareholders’ Equity
Noncontrolling Interests                   3,535,304           4,250,485
Total Equity                               476,621,661         413,662,020
Total Liabilities and Equity             $ 1,288,656,905     $ 1,193,266,118
                                                                             

Kite Realty Group Trust
Consolidated Statements of Operations
For the Three and Twelve Months Ended December 31, 2012 and 2011
(Unaudited)
                                                   
                    Three Months Ended                Twelve Months Ended

                    December 31,                      December 31,
                    2012            2011             2012             2011
Revenue:
Minimum rent        $ 19,973,987     $ 18,425,849     $ 76,529,463      $ 70,471,652
Tenant                5,493,941        4,930,199        20,178,355        18,912,561
reimbursements
Other property        1,110,082        1,097,130        4,051,442         4,250,647
related revenue
Construction and
service fee           144,062          106,285          294,610           373,104
revenue
Total revenue         26,722,072       24,559,463       101,053,870       94,007,964
Expenses:
Property              4,631,500        4,383,556        17,391,918        17,554,804
operating
Real estate taxes     3,493,512        3,154,700        13,300,245        12,873,933
Cost of
construction and      73,057           9,092            325,420           309,074
services
General,
administrative,       1,862,783        1,619,235        7,124,078         6,280,294
and other
Acquisition costs     185,263          —                364,364           —
Litigation            (281,995   )     —                1,007,451         —
charge, net
Depreciation and      9,829,147        8,519,665        40,372,414        34,698,029
amortization
Total expenses        19,793,267       17,686,248       79,885,890        71,716,134
Operating income      6,928,805        6,873,215        21,167,980        22,291,830
Interest expense      (6,495,927 )     (6,598,559 )     (25,660,381 )     (23,599,227 )
Income tax
benefit of            99,989           74,022           105,984           1,294
taxable REIT
subsidiary
(Loss)/income
from                  (23        )     89,181           91,452            333,628
unconsolidated
entities
Gain on sale of
unconsolidated        —                4,320,155        —                 4,320,155
property, net
Remeasurement
loss on
consolidation of      (7,979,626 )     —                (7,979,626  )     —
Parkside Town
Commons, net
Other income          39,881           25,397           148,506           208,813
(Loss) income
from continuing       (7,406,901 )     4,783,411        (12,126,085 )     3,556,493
operations
Discontinued
operations:
Income from           255,851          530,244          1,327,063         1,826,156
operations
Gain (loss) on
sale of operating
properties, net       1,913,670        (397,909   )     7,094,238        (397,909    )
of tax
benefit/(expense)
Income from
discontinued          2,169,521        132,335          8,421,301        1,428,247
operations
Consolidated net      (5,237,380 )     4,915,746        (3,704,784  )     4,984,740
(loss)/income
Net loss/(income)
attributable to       884,528          (414,434   )     (629,063    )     (3,466      )
noncontrolling
interests
Net (loss) income
attributable to
Kite Realty Group     (4,352,852 )     4,501,312        (4,333,847  )     4,981,274

Trust
Dividends on          (2,114,063 )     (1,443,750 )     (7,920,002  )     (5,775,000  )
preferred shares
Net (loss) income
attributable to     $ (6,466,915 )   $ 3,057,562      $ (12,253,849 )   $ (793,726    )
common
shareholders
                                                                                      
Net (loss) income
per common share
attributable to
Kite Realty Group
Trust common
shareholders –
basic and diluted
(Loss) income
from continuing
operations          $ (0.12      )   $ 0.05           $ (0.27       )   $ (0.03       )
attributable to
common
shareholders
Income from
discontinued
operations            0.03             0.00             0.09             0.02
attributable to
common
shareholders
Net (loss) income
attributable to     $ (0.09      )   $ 0.05           $ (0.18       )   $ (0.01       )
common
shareholders
                                                                                      
Weighted average
common shares         74,966,736       63,613,728       66,885,259        63,557,322
outstanding –
basic
Weighted average
common shares         74,966,736       71,696,106       66,885,259        63,557,322
outstanding -
diluted
Dividends
declared per        $ 0.06           $ 0.06           $ 0.24            $ 0.24
common share
                                                                                      
(Loss) income
attributable to
Kite Realty Group
Trust common
shareholders:
(Loss) income
from continuing     $ (8,684,021 )   $ 2,939,703      $ (18,181,128 )   $ (2,065,572  )
operations
Income from
discontinued          2,217,106        117,859          5,927,279         1,271,846
operations
Net (loss) income
attributable to
Kite Realty Group   $ (6,466,915 )   $ 3,057,562      $ (12,253,849 )   $ (793,726    )
Trust common
shareholders
                                                                                      

Kite Realty Group Trust
Funds From Operations
For the Three and Twelve Months Ended December 31, 2012 and 2011
(Unaudited)
                                                
                 Three Months Ended                Twelve Months Ended
                 December 31,                      December 31,
                 2012            2011             2012            2011
Consolidated
net (loss) /     $ (5,237,380 )   $ 4,915,746      $ (3,704,784 )   $ 4,984,740
income
Less dividends
on preferred       (2,114,063 )     (1,443,750 )     (7,920,002 )     (5,775,000 )
shares
Less net
income
attributable
to                 (25,910    )     (38,244    )     (137,552   )     (101,069   )
noncontrolling
interests in
properties
Less (loss)
gain on sale
of operating       (1,913,670 )     397,909          (7,094,238 )     397,909
properties,
net
Less gain on
sale of            —                (4,320,155 )     —                (4,320,155 )
unconsolidated
property, net
Add
remeasurement
loss on
consolidation      7,979,626        —                7,979,626        —
of Parkside
Town Commons,
net
Add
depreciation
and
amortization
of                 9,775,837        9,054,424        41,357,472       36,577,580
consolidated
entities, net
of
noncontrolling
interests
Funds From
Operations of      8,464,440        8,565,930        30,480,522       31,764,005
the Kite
Portfolio^1
Less
redeemable
noncontrolling     (696,033   )     (942,252   )     (3,020,454 )     (3,494,040 )
interests in
Funds From
Operations
Funds From
Operations       $ 7,768,407      $ 7,623,678      $ 27,460,068     $ 28,269,965
allocable to
the Company^1
                                                                                 
Basic FFO per
share of the     $ 0.10           $ 0.12           $ 0.41           $ 0.44
Kite Portfolio
Diluted FFO
per share of     $ 0.10           $ 0.12           $ 0.41           $ 0.44
the Kite
Portfolio
                                                                                 
Funds From
Operations of    $ 8,464,440      $ 8,565,930      $ 30,480,522     $ 31,764,005
the Kite
Portfolio
Add back:
litigation         (281,995   )     —                1,007,451        —
charge, net
Add back:
accelerated
amortization       —                —                500,028          —
of deferred
financing fees
Funds From
Operations of
the Kite         $ 8,182,445      $ 8,565,930      $ 31,988,001     $ 31,764,005
Portfolio, as
adjusted
Basic and
Diluted FFO
per share of     $ 0.10           $ 0.12           $ 0.43           $ 0.44
the Kite
Portfolio, as
adjusted
                                                                                 
Basic weighted
average Common     74,966,736       63,613,728       66,885,259       63,557,322
Shares
outstanding
Diluted
weighted
average Common     75,332,552       63,852,565       67,226,023       63,828,582
Shares
outstanding
Basic weighted
average Common
Shares and         81,706,988       71,457,269       74,279,746       71,406,505
Units
outstanding
Diluted
weighted
average Common     82,072,803       71,696,106       74,620,510       71,677,765
Shares and
Units
outstanding
                                                                                 

____________________
      “Funds From Operations of the Operating Partnership” measures 100% of
      the operating performance of the Operating Partnership’s real estate
1    properties and construction and service subsidiaries in which the
      Company owns an interest. “Funds From Operations allocable to the
      Company” reflects a reduction for the redeemable noncontrolling weighted
      average diluted interest in the Operating Partnership.
      

Kite Realty Group Trust
Same Property Net Operating Income
For the Three and Twelve Months Ended December 31, 2012 and 2011
(Unaudited)
                                                           
                 Three Months Ended December 31,              Twelve Months Ended December 31,
                 2012            2011            %          2012             2011             %
                                                   Change                                         Change
Number of
properties at      48               48                          48                48
period end^1
                                                                                                         
Leased
percentage at      93.7%            92.8%                       93.7%             92.8%
period-end
Minimum rent     $ 17,357,625     $ 17,219,688                $ 66,456,075      $ 65,828,563
Tenant             4,894,778        4,513,786                   17,732,610        17,103,699
recoveries
Other income       972,050          824,280                     2,592,379         2,217,497
                   23,224,453       22,557,754                  86,781,064        85,149,759
                                                                                                         
Property
operating          5,122,710        4,962,551                   17,660,550        18,035,095
expenses
Real estate        3,071,234        3,010,722                   11,788,880        11,542,059
taxes
                   8,193,944        7,973,273                   29,449,430        29,577,154
                                                                               
Net operating
income – same    $ 15,030,509     $ 14,584,481     3.1    %   $ 57,331,634      $ 55,572,605      3.2    %
properties (48
properties)^2
                                                                                                         
Reconciliation
to Most
Directly
Comparable
GAAP Measure:
                                                                                                         
Net operating
income – same    $ 15,030,509     $ 14,584,481                $ 57,331,634      $ 55,572,605
properties
Net operating
income –           3,422,489        2,330,441                   12,370,099        11,953,672
non-same
properties
Construction,      210,852          285,793                     315,132           607,765
net and other
General,
administrative
and                (2,048,046 )     (1,619,235 )                (7,124,078  )     (6,280,294  )
acquisition
expenses
Litigation         281,995          —                           (1,007,451  )     —
charge
Depreciation       (9,829,147 )     (8,519,665 )                (40,371,414 )     (34,698,029 )
expense
Interest           (6,495,927 )     (6,598,559 )                (25,660,381 )     (23,599,227 )
expense
Discontinued       255,851          530,244                     1,327,063         1,826,157
operations
Gain (loss) on
sale of            1,913,670        3,922,246                   7,094,238         (397,909    )
operating
properties
Remeasurement
loss on
consolidation      (7,979,626 )     —                           (7,979,626  )     —
of Parkside
Town Commons,
net
Net loss
(income)
attributable       884,528          (414,434   )                (629,063    )     (3,466      )
to
noncontrolling
interests
Dividends on
preferred          (2,114,063 )     (1,443,750 )                (7,920,002  )     (5,775,000  )
shares
Net (loss)
income
attributable     $ (6,466,915 )   $ 3,057,562                 $ (12,253,849 )   $ (793,726    )
to common
shareholders
                                                                                                         

____________________
      Same Property analysis excludes Courthouse Shadows, Four Corner Square,
1    Rangeline Crossing and Bolton Plaza as the Company pursues redevelopment
      of these properties.
      
      Same Property net operating income is considered a non-GAAP measure
      because it excludes net gains from outlot sales, write offs of
2     straight-line rent and lease intangibles, bad debt expense and related
      recoveries, lease termination fees and significant prior year expense
      recoveries and adjustments, if any.
      

The Company believes that Net Operating Income (“NOI”) is helpful to investors
as a measure of its operating performance because it excludes various items
included in net income that do not relate to or are not indicative of its
operating performance, such as depreciation and amortization, interest
expense, and impairment, if any. The Company believes that Same Property NOI
is helpful to investors as a measure of its operating performance because it
includes only the NOI of properties that have been owned for the full period
presented, which eliminates disparities in net income due to the
redevelopment, acquisition or disposition of properties during the particular
period presented, and thus provides a more consistent metric for the
comparison of the Company's properties. Same Property NOI should not, however,
be considered as alternatives to net income (calculated in accordance with
GAAP) as indicators of the Company's financial performance.

Contact:

Kite Realty Group Trust
Dan Sink, Chief Financial Officer, 317-577-5609
dsink@kiterealty.com
or
Investors/Media:
Adam Basch, Financial Analyst, 317-578-5161
abasch@kiterealty.com
 
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